The main differentiator between Litecoin and Bitcoin appears to be the quantity of coins available, the frequency in which the blocks are mined, and the mining technology is different.

The first benefit "Quantity" appears to be a subdivision of another arbitrary fixed value. Since BTC is easily divisible, I don't see the the benefit of having more units that can also be subdivided.

The second benefit "Frequency" appears to create more blocks for the sake of creating blocks, and the safety zone of one 1 hour double spend attack has changed from 6 blocks BTC to 150 blocks Litecoin. (no benefit)

So what economic value does litecoin provide

During the high value mining period? (high block reward)

During the low value mining period? (low block reward)

In other words, it seems that the initial differences between BTC and Lightcoin deal with the block reward, but once that is used up (or too low of a value) there isn't much more that makes Lightcoin more exceptional than BTC.

4 Answers
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The major difference between litecoin and bitcoin is the hashing function. Bitcoin uses SHA-256 while litecoin uses scrypt. scrypt "is designed to be far more secure against hardware brute-force attacks than alternative functions" [1]. By hardware brute-force attacks they basically mean ASICs such as the ones coming out of butterfly labs. For instance the advantage that GPUs have above CPUs when mining litecoins is much much smaller than the advantage they have for mining bitcoins. It may well be that at some point ASICs will be made for litecoin, but the creators of litecoin specifically chose the hash function to make that happen as far in the future as possible.

The other differences are trivial, but it may be nicer to have confirmations come in faster. The only real difference to having blocks made faster will mean that transactions will sit at 0 confirmations for less time. However still the absolute number of confirmations a transaction is not what makes it safe, but rather the amount of computation that has gone into making those confirmations.

@makerofthings7 the costs for electricity is directly dependent on the exchange rate, which depends on what people are willing to trade for it. You can't really say which is more cost effective in that respect.
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Peter Micheal Lacey-BordeauxMar 8 '13 at 21:21

@makerofthings7 In refrence to the idea of chain splits, a chain split happens when two blocks are found at near the same time, this is directly related to the probability of finding a block, because the probability of finding a litecoin block is higher than the probability of finding a bitcoin block there will most likely be more splits. That is why the higher number of confirmations doesn't mean that it is more secure.
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Peter Micheal Lacey-BordeauxMar 8 '13 at 21:22

Certainly with faster blocks comes the fact that more miners will be working on chains that in the end will not become the official one - since transmission time between node is finite this is unavoidable. So instead of the 6+ blocks you wait for in Bitcoin for your transaction to be considered cast in stone, you should wait for 12+ blocks in Litecoin. Why just double blocks and not quadruple, as block generation is 4x faster? Because, with each new block, beating the entire net becomes exponentially more difficult, there's a paper explaining the math in the Litecoin site.
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Joe PinedaDec 3 '13 at 15:35

The frequency of blocks (2.5 min vs. 10 min) does indeed mean it takes less time to obtain a similar level of security, this is an advantage. The idea that only the total amount of computation matters is a myth - see https://bitcoil.co.il/Doublespend.pdf.

Of course, there are also disadvantages with the choice of shorter time constant, but it's safe to say that 2.5 min is a better choice than 10 min.

Thanks for replying Meni, I enjoy reading your thought provoking posts. I can't access that PDF, but want to get your opinion: As block frequency decreases, won't the chance of splits, and therefore wasted computation occur in increasing frequency? Could block witholding be used as an attack? (or one in greater frequency)
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makerofthings7May 22 '13 at 18:28

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@makerofthings7: Indeed, if the time constant decreases (block frequency increases), there will be more forking and reduced effective hashrate, making an attack easier. However, even with 2.5 min this effect is small, you'd need to go lower to really be affected. I don't know of an effect the time constant has on block withholding attacks specifically.
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Meni RosenfeldMay 23 '13 at 10:58

There was this crazy alt-coin that had blocks every 30 secs., at the cost of massive amounts of orphaned blocks. An alt-coin generating one block every 2 days would have none, though I wouldn't use it. So the interesting question is: what is the optimal frequency? Which I suspect depends on network latency and computing power available...
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Joe PinedaDec 3 '13 at 16:03

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@JoePineda: This is indeed an interesting question which is why I once suggested dynamic block time to optimize it - bitcointalk.org/index.php?topic=79837.0. But now I can also say - stay tuned for a new research development that might revolutionize this tradeoff.
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Meni RosenfeldDec 3 '13 at 22:24

One of Scrypts design goals was to make CPU mining and GPU mining equally effective. They tried to do this through requiring lots of quick memory access, so the process ends up being more limited by memory bandwidth and response time.

ASIC and FGPA has not and will not solve the problem, because adding the amount of memory needed is a daunting design task.

Outside of Scrypt there is very little difference between BTC and LTC.

I'm honestly not sure why anyone even buys into LTC, where are the people using it? Is Silk Road using LTC or is there some kind of LTC gambling?

What protects you from a double-spend attack is not how slow or fast are the blocks generated, but the amount of processing power applied into creating those blocks so that it's unfeasible for an attacker to beat the combined hashing power of the rest of the network, minus the uncertainty inherent in the (unavoidable) orphaned blocks.

Now, whence do you get that the protection for a double spend attack comes from 6 blocks in Bitcoin, but 150 in Litecoin? Even a very naïf analysis would yield 24 blocks which still equals an hour (4x generation speed, I wait for 4x blocks). It's actually just 12 blocks, so only need to wait for half an hour.

If I were to accept a virtual currency in exchange of a cup of coffee, I'd definitely prefer Litecoin if only because of this.